Cultural Revolutions

Banking on Fraud

The insight at the core of the conservative disposition—that the future is invariably worse than the past—enjoys daily confirmation as the economic crisis deepens.  It seems that in many respects we have entered a new world, which, given the circumstances of its birth, is sure to be rather grim.

We got a good glimpse at that grimness in the testimony of former Secretary of the Treasury Hank Paulson before the House Oversight Committee on the rationale behind the bank bailout.  According to the Independent, as Lehman Brothers failed last fall, “The Bush Administration and Congress discussed the possibility of a breakdown in law and order and the logistics of feeding US citizens if commerce and banking collapsed. . . . Paulson said it was important at the time not to reveal the extent of officials’ concerns, for fear it would ‘terrify the American people and lead to an even bigger problem.’”

A problem for whom?  Why, for the banks, which had stolen the savings of the American people.  Or, as the Independent put it, “Mr Paulson testified to the House Oversight Committee on the Bush administration’s unpopular $700bn (£426bn) bailout of Wall Street, which was triggered by the failure of Lehman Brothers last September.  In the days that followed, a run on some of the safest investment vehicles in the financial markets threatened to make it...

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